‘One of the greatest losses of wealth ever’

Fund boss Bill Hwang reels after meltdown

THe man at the centre of a hedge fund meltdown has broken his silence after suffering ‘one of the single greatest losses of personal wealth in history’.

Bill Hwang, a multi-billionaire financier who invested his wealth through his firm archegos Capital Management, went to ground after his fund hit the rocks last week.

But in the first disclosure the firm has made since causing a £20bn sell- off, a spokesman for archegos said Hwang, pictured, was having a ‘challenging time’ and was still trying to ‘determine the best path forward’.

The comments came as experts tried to get a grip on the losses which Hwang has suffered.

Mike novogratz, a former goldman Sachs partner who has been investing for almost three decades, said: ‘When the facts come out, my sense is the Bill Hwang blow-up will be the most spectacular personal loss of wealth in history.’

Bankers and analysts have estimated that the personal fortune of Hwang, a former hedge fund manager known as a ‘Tiger cub’ because he earned his credentials at the renowned Julian robertson’s Tiger Management, could have topped £7bn before last week’s meltdown.

But because he borrowed so much to increase the size of his trades, the sell-off he caused was much bigger.

archegos said: ‘ This is a challenging time for the family office of archegos Capital Management, our partners and employees. all plans are being discussed as Mr Hwang and the team determine the best path forward.’

So- called family offices like archegos, which manage the money of one very wealthy family, are exempt from making many of the disclosures which normal hedge funds and investment firms are held to. This means the actual size of Hwang’s fortune, and how much has been eroded from it, are unclear.

archegos fell into trouble last week, after a few stocks it placed big bets on – including US media titans Viacom, CBS and Discovery – fell in value.

Shareholders were worried that the companies were losing ground to newer rivals such as netflix and Disney plus. But the situation spiralled out of control for archegos. it had borrowed large amounts of money from the prime brokerage arms of banks to increase its stake in firms such as Viacom.

This allowed it to buy a larger exposure than it would otherwise be able to afford.

But when those prime brokers saw Viacom shares falling, they issued a margin call – essentially asking Hwang to give them more money as security, to protect them from any losses.

Hwang didn’t have the cash to hand, meaning he defaulted on his loans with the prime brokers. This gave them the right to sell the shares they held on his behalf, to recoup the money he owed them.

it prompted a sell- off of around £20bn, as prime brokers including goldman Sachs, Morgan Stanley, Wells Fargo and UBS rapidly offloaded Hwang’s stock, causing their price to plummet further as the market was flooded.

Credit Suisse and Japanese bank nomura, which were slower to sell, have suffered massive losses. analysts at Jp Morgan estimate losses across all banks from the crisis could hit £7bn.

now, regulators around the world are quizzing the prime brokers involved, to see if any acted inappropriately. The UK’s Financial Conduct authority and the US Securities and exchange Commission have requested information from the banks.

although the debacle might be the most financially painful for Hwang, it isn’t the first scandal he has been involved in.

in 2012, he admitted in a US lawsuit to insider trading and manipulating Chinese bank stocks. He stumped up £32m in fines and agreed to be barred from the industry. For years after, he was blacklisted by banks including goldman Sachs which refused to work with him.

goldman eventually relented, enticed by the lucrative business which Hwang represented.